-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S56JwkI0ByRuVQqzUYgcf+8zwX61ELtpgFQl7o6mf0zn68OhW43QrEbIniG+gYJm jKnxUrU5P/rCbPSLMwsbmA== 0000912057-97-004067.txt : 19970221 0000912057-97-004067.hdr.sgml : 19970221 ACCESSION NUMBER: 0000912057-97-004067 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970211 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL FOOD & BEVERAGE INC /DE/ CENTRAL INDEX KEY: 0000880584 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FOOD PREPARATIONS & KINDRED PRODUCTS [2090] IRS NUMBER: 330307734 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-43621 FILM NUMBER: 97524022 BUSINESS ADDRESS: STREET 1: 30152 AVENTURA STREET 2: PO BOX 80609 CITY: RANCHO SANTA MARGARI STATE: CA ZIP: 92668 BUSINESS PHONE: 7148588800 MAIL ADDRESS: STREET 1: 30152 AVENTURA STREET 2: PO BOX 80609 CITY: RANCHO SANTA MARGARI STATE: CA ZIP: 92688 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended DECEMBER 28, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 33-43621 INTERNATIONAL FOOD AND BEVERAGE, INC. (Exact name of registrant as specified in its charter) DELAWARE 33-0307734 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 30152 AVENTURA, RANCHO SANTA MARGARITA, CALIFORNIA 92688 (Address of principal executive offices) (Zip Code) (714) 858-8800 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------- --------- The number of shares of Common Stock outstanding as of January 31, 1997 was: 156,599,351 INTERNATIONAL FOOD AND BEVERAGE, INC. FINANCIAL STATEMENTS AND OTHER INFORMATION INDEX PAGE NUMBER PART I - FINANCIAL INFORMATION Item 1. Financial Statements Statements of Operations for the three months and six months ended December 28, 1996 and December 30, 1995 1 Balance Sheets as of December 28, 1996 and June 29, 1996 2 Statements of Cash Flows for the six months ended December 28, 1996 and December 30, 1995 3 Notes to Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 6 SIGNATURES 6 INTERNATIONAL FOOD AND BEVERAGE, INC. PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED (Unaudited) (Unaudited) DECEMBER 28, DECEMBER 30, DECEMBER 28, DECEMBER 30, 1996 1995 1996 1995 ------------ ------------ ------------ ------------ REVENUES $ 2,079,000 $ 1,433,000 $ 4,072,000 $ 3,009,000 COST OF SALES 1,618,000 1,215,000 3,221,000 2,444,000 ----------- ----------- ----------- ----------- GROSS PROFIT 461,000 218,000 851,000 565,000 OPERATING EXPENSES: Selling and distribution 379,000 247,000 713,000 506,000 General and administrative 151,000 139,000 292,000 276,000 Interest expense 29,000 8,000 60,000 12,000 ----------- ----------- ----------- ----------- 559,000 394,000 1,065,000 794,000 ----------- ----------- ----------- ----------- NET LOSS $ (98,000) $ (176,000) $ (214,000) $ (229,000) =========== =========== =========== =========== NET LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00) $ (.00) =========== =========== =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 156,591,878 154,023,569 156,129,120 154,023,569 =========== =========== =========== ===========
See accompanying notes. -1- INTERNATIONAL FOOD AND BEVERAGE, INC. BALANCE SHEETS DECEMBER 28, JUNE 29, 1996 1996 ----------- --------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 22,000 $ 20,000 Accounts receivable 571,000 505,000 Inventories 532,000 643,000 Prepaid expenses 5,000 7,000 ---------- ---------- Total current assets 1,130,000 1,175,000 FIXED ASSETS 837,000 905,000 ---------- ---------- $1,967,000 $2,080,000 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Notes payable and current maturities of long-term debt $ 462,000 $ 429,000 Accounts payable 883,000 840,000 Accrued wages and benefits 379,000 373,000 Accrued commissions and marketing 236,000 181,000 Other accrued expenses 110,000 118,000 ---------- ---------- Total current liabilities 2,070,000 1,941,000 LONG-TERM DEBT 710,000 756,000 SHAREHOLDERS' EQUITY (DEFICIENCY) (813,000) (617,000) ---------- ---------- $1,967,000 $2,080,000 ========== ========== See accompanying notes. -2- INTERNATIONAL FOOD AND BEVERAGE, INC. STATEMENTS OF CASH FLOWS SIX MONTHS ENDED --------------------------- (Unaudited) DECEMBER 28, DECEMBER 30, 1996 1995 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (214,000) $ (229,000) Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization 80,000 84,000 Issuance of Common Stock under distribution agreement 18,000 Changes in assets and liabilities: Accounts receivable (66,000) (138,000) Inventories 111,000 60,000 Prepaid expenses 2,000 24,000 Accounts payable 43,000 343,000 Accrued wages and benefits 6,000 (48,000) Accrued commissions and marketing 55,000 (343,000) Accrued expenses (8,000) (9,000) ----------- ----------- Net cash provided by (used in) operating activities 27,000 (256,000) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to fixed assets (12,000) (25,000) ----------- ----------- Net cash used by investing activities (12,000) (25,000) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of notes payable 39,000 190,000 Principal payments on notes payable (52,000) (49,000) ----------- ----------- Net cash provided by (used in) financing activities (13,000) 141,000 ----------- ----------- NET INCREASE (DECREASE) IN CASH 2,000 (140,000) CASH AND CASH EQUIVALENTS, beginning of year 20,000 192,000 ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 22,000 $ 52,000 =========== =========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 57,000 $ 12,000 Income taxes 0 0 See accompanying notes. -3- INTERNATIONAL FOOD AND BEVERAGE, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - FINANCIAL STATEMENTS In the opinion of management, the accompanying financial statements, which have not been audited by independent public accountants, reflect all adjustments necessary to present fairly the data for the periods presented therein. The results of operations for the six month period ended December 28, 1996 are not necessarily indicative of the results that may be expected for the entire fiscal year ending June 28, 1997. NOTE 2 - CHANGE IN CONTROL A change in control transaction occurred December 31, 1994 and was recorded in conformity with Accounting Principles Board Opinion No. 16. Accordingly, assets and liabilities as of January 1, 1995 were restated and the results of operations since that time reflect the "push-down" of the new controlling shareholder's basis, minority interest at its historical basis, and the consideration received from the former controlling shareholder. The historical acquisition cost of the company's fixed assets was approximately $4,000,000, however, as a result of "push-down" accounting these assets are reported currently on the Company's financial statements with a cost after accumulated depreciation of $837,000. See footnotes to the audited financial statements for a more detailed description of the transaction. -4- INTERNATIONAL FOOD AND BEVERAGE, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenues for the six month period ended December 28, 1996 of $4,072,000 increased 35% when compared with revenues of $3,009,000 in the prior year comparable period. Revenues for the most recent quarter increased 45% when compared with revenues in the comparable three month period of the prior year. The Company's business expanded with sales increases from retail grocery, foodservice and contract manufacturing customers. In May 1996, the Company introduced a line of pizzas which are sold under a private label brand in the frozen food section of a major national grocery retailer. The Company expects private label frozen pizza sales to continue to grow and recently added a second major grocery retailer private label program with initial shipments in February 1997. The Company does, however, expect a decrease in its contract manufacturing sales due to product changes and inherent uncertainties surrounding several of the contract manufacturer's customers. The gross profit margin for the six months ended December 28, 1996 increased to 20.9% versus the prior year comparable period gross margin of 18.8%. In the most recent three month period, gross profit margin increased to 22.2% versus 15.2% in the comparable prior year period. The current year margin improvements result from the decrease in cheese prices beginning late in October 1996 to more normal historical pricing levels, a more favorable customer mix purchasing higher margin products, and the benefit derived from a higher level of overhead absorption as a result of increased sales. Despite margin improvements, fixed overhead per unit sold remains high at the Company's low level of production. The Company would realize an increase in its gross profit contribution rate assuming the Company is able to achieve increased production volume and ingredient prices remain stable. Selling, general and administrative expenses for the six months as well as the quarter ended December 28, 1996 decreased as a percent of sales versus the prior year comparable periods to 24.7% and 25.5% from 26.0% and 26.9%, respectively, primarily due to increased revenues. The Company does not anticipate having to add substantially to fixed overhead costs to support revenue growth of fifty to one hundred percent of its current revenue level assuming a similar mix of products and customers. As a result of higher borrowings in the current fiscal year, interest expense for the six months and quarter ended December 28, 1996 increased to $60,000 and $29,000 from $12,000 and $8,000 for the comparable prior year periods, respectively. The resulting loss for the six month and three month periods ended December 28, 1996 was $214,000 and $98,000 versus reported comparable prior year period losses of $229,000 and $176,000, respectively. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities was $27,000 for the six month period ended December 28, 1996 versus cash used in operating activities of $256,000 in the comparable prior year period. The cash provided by operations during the current fiscal year was generated primarily from additional balance sheet financing. Such cash together with a small increase in the outstanding borrowings were adequate to finance nominal fixed asset additions and service the Company's long term debt obligations during the period. Management believes that the Company will experience positive cash flow when it achieves a sustained average monthly revenue rate of approximately $750,000 at current sales prices and product mix. In March 1996, the Company entered into a $500,000 revolving line of credit agreement collateralized by eligible accounts receivable and inventories. Throughout January and into February 1997 the outstanding borrowings under this credit facility averaged approximately $450,000. The Company has received from its lender a temporary approval for an increase in the line limit to $550,000, subject to available collateral, with a request for a permanent -5- INTERNATIONAL FOOD AND BEVERAGE, INC. LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) increase in the limit to $750,000 pending completion of their quarterly audit and loan committee approval. At the Company's current level of operations management believes that this credit facility will be adequate to fund the Company's short term working capital requirements. There is no assurance that the Company will be successful in obtaining the additional financing. The Company's primary emphasis remains revenue generation through increased sales to existing and new customers. It is also aggressively evaluating opportunities ranging from contract manufacturing for others to the acquisition of a synergistic product line or company. The foregoing Management's Discussion and Analysis contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, regarding management's expectations concerning gross profit contribution, cheese prices, volume, the adequacy of funds from the existing credit facility, the efforts to obtain an increase in the credit facility and the level at which the Company's operations become cash positive. The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements, including, among others, the following: reduced or lack of increase in demand for the Company's products, competitive pricing pressures, changes in the market price of ingredients used in the Company's products and unforeseen increases in the level of expenses incurred in the Company's operations. PART II - OTHER INFORMATION ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K (a) None. (b) No reports on Form 8-K were filed during the three months ended December 28, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: FEBRUARY 10, 1997 INTERNATIONAL FOOD AND BEVERAGE, INC. /s/ MICHAEL W. HOGARTY Michael W. Hogarty President and Chief Executive Officer /s/ ANN M. GOOCH Ann M. Gooch Vice President of Finance (Principal Financial and Accounting Officer) -6- EX-27 2 EXHIBIT 27 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER 28, 1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 6-MOS JUN-28-1997 JUN-30-1996 DEC-28-1996 22 0 641 70 532 1,130 1,166 329 1,967 2,070 0 0 0 413 (1,226) 1,967 4,072 4,072 3,221 1,005 0 0 60 (214) 0 (214) 0 0 0 (214) (.00) (.00)
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